Algeria set to boost wireless broadband - the way for emerging markets?

Broadband access in emerging markets has been slow to develop due to its reliance on widespread copper-pair infrastructure. Consulting firm Analysys believes that broadband access in developing markets is likely to develop but thanks to new wireless access networks. This report looks at Algeria, where over half of broadband access revenues could be derived from wireless access technologies by 2012. An indicator of the future for emerging markets? Analysys, a global practice of telecoms consultants and analysts, has closely followed and commented on the success of mobile telephony in emerging markets. The firm has identified broadband Internet as perhaps the next source of growth in the developing markets.

Broadband access in emerging markets has until now been slow to develop due to its reliance on widespread copper-pair infrastructure. Analysys now believes that broadband access in such markets is likely to develop mainly thanks to the roll-out of wireless access networks. Indeed, Analysys is predicting that "more than half of broadband access revenues in Algeria could be derived from wireless access technologies by 2012...a possible indicator of things to come in other emerging markets."

There are several factors that Analysys believes will affect wireless broadband take-up in exactly this type of market:

  • demand from residential and business customers;
  • limited availability of fixed infrastructure for Internet access services, including xDSL;
  • ability to deploy alternative technologies, including fixed wireless access (FWA), WiFi, WiMAX and mobile broadband (EDGE, UMTS, or CDMA-EVDO);
  • availability and price of licences and spectrum cost of terminals; and
  • customer premises equipment (CPE).

And Algeria in particular?

Based on recent work by Analysys not just in Algeria but also in similar markets, Algeria is a market that will see strong growth in wireless broadband. Looking to the immediate past to try to predict the immediate future, the number of Algerian mobile subscribers has increased dramatically (from 4.9 million in 2004 to 20.6 million at the end of 2006). Given possible plans to award a fourth mobile licence in 2007 and the 35% privatisation of the incumbent Algerie Telecom expected soon, the Algerian telecoms market will undergo significant change in the next few years. In terms of the key success factors above:

  • Algeria has one of the highest disposable incomes per capita in North Africa (US$1,443 per capita in 2006; source: EIU);
  • penetration of PSTN lines is low (less than 8% in 2005; source: ARPT, the Algerian regulator);
  • Algerie Telecom, Lacom (a fixed altnet that entered the market in 2006) and ISPs such as SLC and EEPAD are rolling out FWA, WiFi or WiMAX services. Meanwhile, GSM players are progressively upgrading their networks to GPRS and potentially to EDGE or 3G in the future;
  • further WiMAX and FWA spectrum is expected to be awarded soon, fostering competition in the wireless access market; and
  • Algerian end users will benefit as terminals and CPE become cheaper.

Conclusions

Analysys estimates that the Internet broadband market in Algeria will reach 2.2 million access lines and more than US$650 million of revenues in 2012. It expects more than half of these revenues to be derived from wireless access technologies (mobile broadband, WiMAX and FWA (Chart 1). What happens in Algeria may well prove an indicator of things to come in other emerging markets.


Chart 1: Forecast of broadband market revenues by access technology in Algeria (Source: ARPT, EIU, ITU, Analysys Consulting, 2007)

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